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3 Lame Excuses for not Investing in a 401(k)

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There are plenty of justifications that people use for neglecting to invest in an available 401(k) but, frankly, very few of them are all that good. We’ve put together a list of 3 of the lamest excuses that we know for not stashing money into this excellent retirement account option. If you’re using one of them, it might be time you are to look at “the big picture” and we’ve got some advice for you if you’re willing to do so. Enjoy.

Lame Excuse 1: The terminology is too confusing. Okay, we can agree that some of the terms being used are a little difficult to understand. Dollar-cost averaging, compounding interest and market capitalization aren’t exactly words or ideas that most of us need to wrap our minds around on a regular basis. As a matter of fact, a survey done by Jackson Investor Education last year showed that over 40% of Americans feel they aren’t knowledgeable enough about finances to make smart decisions. The answer: Increase your knowledge. Simply put, with a computer (or tablet) you can easily research the wide assortment of financial resources available online to find out what all of these 401(k) words and terms mean, get comfortable with them and educate yourself to a high degree about your investment options and opportunities.

Lame Excuse 2: I can’t afford to contribute, so what’s the point? This is, unfortunately, an excuse used by millions of Americans who work at lower income jobs. They believe that since they have very little extra money at the end of the month they won’t be able to put enough into a 401(k) for it to make a difference and so they don’t even bother. The answer: Contribute as much as you can, even if it’s very small.

Here’s a great example. If you put $500 into a 401(k) this month and then never touched it or contributed another dime, in 30 years you would have over $5300. The reason is simply that compound interest is one of the most powerful financial forces that you can use to grow your money. Even if you can’t put $500 a month into a 401(k), most people could easily put $100 a month, or $1200 a year, and let compound interest turn it into quite a bit more.

Lame Excuse 3: I always forget to put money into my 401(k). This might be the lamest excuse of all, especially when setting up an automatic paycheck deduction is so simple. Simply go to the person at your company or business that handles payroll and within minutes you can set up to have a specific amount of money automatically deducted from your paycheck every week to go towards your 401(k). Simple. It’s now automatic and there’s absolutely no effort needed on your part whatsoever to remember anything.

Dearest readers, the simple, unavoidable fact is this; getting started with a 401(k) isn’t nearly as difficult as many people believe it to be. By simply taking a little bit of time and asking a few simple questions you should get the answers that you need and be able to start investing in a 401(k) (or for that matter, an individual IRA) quite quickly and easily. It’s one of the best ways to save for retirement, hands down, so don’t let your fear, apathy or lack of knowledge get in the way of using it.